Lenders Once Again Considering Construction Loans in South Florida
Oct 18, 2013 October 18, 2013
Although banks may once have been hesitant regarding construction lending, that is now changing. Case in point: In what amounts to one of the largest loans for a single construction project in the region, the Porsche Design condo project recently closed on a $214 million loan. The loan was originated by Wells Fargo for Dezer Development and will culminate in the construction of the Porsche Design Tower in Sunny Isles Beach.
Porsche Design condo tower will span 60 floors and include 132 ultra-luxury residences. The closing of the loan for this unique project indicates positive news overall for the recovery of the real estate market in the local area as well as real estate financing. Many commercial banks took leave of construction lending following the crash of the real estate market in the past few years. As housing as well as other segments of the market have begun to experience recovery, an increasing number of lenders have expressed a renewed, if somewhat conservative, interest in construction lending in South Florida.
Dezer Development, who has already completed six successful projects in the local area alone, is not the only example of a successful condo development lending project in the area. The Trump Group, recently obtained a construction loan for $160 million to complete an ultra-luxury condo project in Sunny Isles Beach, as well. Prior to the Dezer Development loan for the Porsche Design condo project, Mansions at Acqualina was one of the largest such loans South Florida had seen for some time.
As an increasing number of lenders are looking for developer applicants with proven track records and an increased equity, many condo projects are turning to an alternative financing model. Sometimes referred to as the Latin American model, this method requires larger deposits from buyers. This often involves at least 50 percent of the purchase price of the unit prior to closing. In the case of the Porsche Design project, more than $535 million in sales have already been secured for the project. Representing more than 66 percent of the proposed units, those sales exceeded the required benchmark required by Wells Fargo to secure the condo development loan.
The Porsche Design Tower